Answer:
The answer is A.
Explanation:
Other things remaining equal, the law of demand says that the higher the price, the lower the quantity demanded and the lower the price the higher the quantity demanded.
Suppose a good is being sold at $5 and 20 quantities are being demanded, if the price increases to $6, lesser of that goods should be demanded
Answer: Micro; Macro; Macro; Micro.
Explanation:
Economics is divided into two main segments which are microeconomics and macroeconomics. It should be noted that microeconomics deals with study of individuals and the firms while macroeconomics studies the while economy and looks at decisions that are made by governments and countries.
a. The effect of higher cigarette taxes on the quantity of cigarettes sold.
This is a microeconomic issue as one entity is being discussed which is cigarette and the issue is related to just one particular industry.
b. The effect of higher income taxes on the total amount of consumer spending.
This is a macroeconomic issue as taxes affects the whole economy. The whole nation is affected by this decision.
c. The reasons for the economies of East Asian countries growing faster than the economies of sub-Saharan African countries.
This is a macroeconomic issue as it relates to different countries.
d. The reasons for low rates of profit in the airline industry.
This is a microeconomic issue as the issue affects just the airline industry.
Answer:
The correct answer is D. imposes a small deadweight loss relative to the tax revenue it raises.
Explanation:
By not discouraging the activity, it is understood that taxes should not distort the economic decisions of the individuals subject to taxation. In the theory of Public Finance the inefficiency of taxation can be analyzed through the so-called "excess tax", as a quantification of the loss of utility generated by a distorting tax. The excess of tax arises because the loss of total welfare generated by the tax on the individual with the modification in their behavior, is greater than the mere loss of welfare caused by the decrease in disposable income that comes with the payment of the tax. The value of excess tax that is generated by the substitution effect is greater the higher the tax rate and elasticity (Musgrave, 1986). Therefore, the relationship of exchange between efficiency and equity is not so simple for governments when designing their fiscal policy.
Entrepreneurs can avoid getting 'caught up in the hype' surrounding their product or service by always maintaining a level head and not obtaining an ego.
